Where Have All the Practice Administrators Gone?

Jane Ehrhardt

Published: May 11, 2015

Jim Stroud, CPA

“There’s already a shortage, and it’s going to get worse,” says Jim Stroud, a CPA with the Warren Averett healthcare consulting group. According to local job listings, medical practices and hospitals are finding it hard to fill practice administrator openings.

“I run the job board for the Birmingham Medical Group Management Association (MGMA),” says Jason Biddy, past president of the group and administrator at Alabama Allergy and Asthma Center in Birmingham. “In the past year, the volume of posts for administrators and practice managers has continually increased. We have seven on the board right now.”

In 2012, administrator jobs appeared on the board only occasionally and stayed up for a short period. “But there’s one right now for an orthopedic group that has been open for three months,” Biddy says.

The acquisition of practices by hospitals seems to have generated a surge in opportunities. “If you’re managing one or two doctors, it’s a pretty simple process so you don’t have to have highly skilled managers,” says Mickey Trimm, PhD, UAB associate professor and director for the Center for Healthcare Management and Leadership. “But when you join a hospital with a practice of 15 to 30 doctors, all of a sudden it’s big business and complex and difficult to manage.”

Unlike the small to medium practices they purchase, hospitals need administrators used to supervising middle management and strategizing expansions and revenue generation. “The hospital may also be thinking they can get someone cheaper than the current administrator, because he’s been there for 25 years and doesn’t meet their education requirement with only a high school diploma,” Stroud says.

Most hospitals want administrators with master’s degrees. “Most of the grad students coming through our program get scooped up by big healthcare systems,” Trimm says. “We put a lot into Baptist and Tenet.” UAB turns out 30 to 35 graduates a year from their masters in health service administration program. “It’s effectively an MBA in healthcare,” he says.

All the grads have jobs before graduating. Practices rarely get a chance to compete, because students serve a year-long residency with a health system as part of the school’s program. “And they typically get hired into that organization,” Trimm says. Most become COOs and CEOs of hospitals. “The degree is in high demand. We turn away three times as many students as we accept.”

Biddy says these highly qualified students bypass positions at private practices out of ignorance. “What MGMA is doing with UAB is making sure the grad students are aware that these jobs are in many cases six-figures and very fulfilling,” he says.

Though hospital executive positions may offer an advanced career path with, ultimately, double or more the salary, working for large practices frees administrators from corporate restrictions and satisfies their entrepreneurial spirit. “As a practice administrator, you’re literally in charge of a small business,” Biddy says. “In my case, it’s a $6 million business. For people who don’t want to be in a corporate structure, that’s appealing.”

It’s not just the grad students at UAB benefitting from the scarcity of administrators. “Our undergrads are getting hired left and right too, and a lot are hired into practice management positions,” Trimm says. UAB graduates 75 to 100 undergrads a year with healthcare management degrees. “I know one is over at Brookwood primary care now. He’s been running practices since he got out two years ago.”

UAB students hired at practices also report quicker promotions. “They’re saying that after six months, the practice opens another office and they’re running it, whereas before, that might take two years,” Trimm says. “That’s probably an indication that there’s not a lot of seasoned people to pull from.”

With the pool of qualified and available administrators dwindling, practices may want to start grooming successors. A retiring practice administrator at one orthopedic group recruited and trained his successor on-the-job for three years. “That tells you how hard that job is,” says Sae Evan, a CPA with Warren Averett.

For now, physicians need to value their good administrators. “The attitude needs to change,” Evan says. Investing in a practice administrator with business savvy will pay off. “Physicians need to think of it as paying for someone to earn additional revenue for their practice,” he says. Just ensuring the practice qualifies for the myriad of incentive payments from payers makes a good administrator worth their high-end salary.

“Make their bonus tied to increases in the physicians’ income,” Stroud says. “It’s motivation, and you’re paying it out of your excess.”

For those seeking to fill administrator jobs now, Biddy suggests recruiting from those with any type of management, finance or accounting education or experience. “You can learn the medical portion,” he says. “A lot of the job is human resources, accounting, and legal knowledge.”

Trimm says the whole job description will be changing again shortly with the advent of accountable care organizations (ACOs). The administrators of large healthcare systems will soon be overseeing not only hospitals, but practices, nursing homes, pharmacies, home healthcare, and the entire gamut for healthcare provision.

“It’s going to be a completely changed landscape,” he says. “It used to be doctors on one side of the street and hospitals on the other side. All that’s going away. It’s all going to be intertwined.”